The Smith family is evaluating two different college loans. Model A repays the loan in up to 10 years with equal monthly payments. Model B allows up to 25 years to repay the loan. Suppose that the family borrows $55,000 at 4.66% compounded monthly.
a) Calculate the monthly payment and total interest paid under the standard plan over 10 years.
b) Calculate the monthly payment and total interest paid under the extended plan over 25 years.
